Obama says he wants balanced approach to fiscal cliff negotiations

Published: Friday, Nov. 9, 2012 7:02 p.m. CDT

By Kathleen Hennessey and Lisa Mascaro - Tribune Washington Bureau

(MCT) WASHINGTON — Three days after his re-election, President Barack Obama said he was ready to reach a long-delayed budget deal with Republican congressional leaders, but reiterated that the wealthy must pay more in taxes, a stance he argued was validated by voters.

“This was a central question during the election,” Obama said. “It was debated over and over again. And on Tuesday night, we found out that the majority of Americans agree with my approach.”

Obama struck a conciliatory tone in his appearance Friday in the White House’s East room, saying he was ready to start building consensus and that he would meet with congressional leaders next week.

But he also renewed pressure on House Republicans to pass a measure the Senate already has approved that would ensure that taxes for 98 percent of Americans would not increase on Jan. 1, when current tax rates are set to expire. Under that bill, rates for the richest taxpayers would increase to the same level they were under the Clinton administration, while current rates would prevail for everyone else.

“I’ve got the pen ready to sign the bill right away. I’m ready to do it,” he said.

The White House strategy appears aimed at repeating one of the administration’s most successful episodes — the fight late in 2011 over cutting payroll taxes. In that dispute, Obama put Republicans in the position of either handing him a victory or voting against a tax cut. He eventually won and reaped significant political benefits.

House Speaker John A. Boehner, who will be Obama’s primary Republican counterpart in the negotiations, reasserted Friday that he is steadfastly opposed to raising tax rates.

“This is an opportunity for the president to lead,” Boehner told reporters at the Capitol. “This is his moment to engage the Congress and work towards a solution that can pass both chambers. “

The coming negotiations create particular problems for the Republicans. If no legislation passes before year’s end, the nation faces a confluence of automatic tax hikes and spending reductions that economists warn could jar the economy back into a recession. If negotiations fail, Obama would get the upper-income tax increase he campaigned on and an opportunity to blame Republicans for raising taxes on all Americans and disrupting the economy.

White House spokesman Jay Carney in a Friday media briefing laid out exactly that scenario, suggesting that Republicans would have a hard time explaining why they let the tax breaks for the middle class expire. “What is the argument for not passing it? That we’re going to force everyone to have a higher tax bill next year just because millionaires and billionaires didn’t get a tax cut?” he said.

Obama’s remarks at the White House were his first since winning an unexpectedly solid victory over GOP nominee Mitt Romney. A core part of his campaign was his promise to make the nation’s top earners “pay their fair share.”

Exit polls of voters released Tuesday showed that 47 percent of Americans supported Obama’s proposal to raise tax rates on income above $250,000 for couples. Another 13 percent said all should pay more in taxes, while 35 percent were against any tax increase.

The president delivered his opening salvo with a hint of stump-speech style and stagecraft. The White House packed the East Room with supporters and positioned the president’s podium in front of a group of citizens — “middle-class Americans and other stakeholders who want to see a balanced approach,” the White House later explained. The group cheered Obama loudly as he entered.

Obama and Boehner laid out their opening positions in the language of compromise, claiming to read the election results as a push toward more cooperative government. The House speaker told reporters, “It’s clear that as a political party, we’ve got some work to do.”

The president said he viewed the election results as a call to action and presented himself as open to new ideas. “I want to be clear: I’m not wedded to every detail of my plan. I’m open to compromise,” Obama said.

Some saw potential areas of agreement in the carefully worded statements. Obama stressed that he wants the wealthy to “to pay a little more in taxes.” But he did not specify how much more or demand that top rates rise from 35 percent to 39.6 percent, as scheduled. He did not address whether he would accept changes to the tax code that eliminate deductions or loopholes, a way to raise some taxpayer’s bills without raising rates.

Boehner has embraced the idea that comprehensive tax reform that lowers rates and cleans up the code would spur economic growth and lead to higher tax revenues. However, many economists are skeptical that such changes would raise enough new revenue to take a sufficient bite out of the deficit.

For now, the sticking point remains the same as before the election. Obama has said he will veto any bill that extends tax cuts for the wealthy past the Dec. 31 expiration date. Boehner and Republicans in the House are dead set against raising tax rates.

Both parties face pressure from their allies against compromising too much. Conservatives remain wedded to their no-new-taxes pledge, while Democratic and labor leaders oppose any deal that appears to shift the burden of deficit reduction to the middle class.